Question 1

An appealing feature of the APT model is that:

Accepted Answer

A)  It makes fewer assumptions about investor behavior and the market structure. 
B)  Is simple to use. 
C)  Is easier to implement. 
D)  Is more accurate in estimating the expected rate of return of an asset. 
E)  None of the above. 
A)  It makes fewer assumptions about investor behavior and the market structure. 
B)  Is simple to use. 
C)  Is easier to implement. 
D)  Is more accurate in estimating the expected rate of return of an asset. 
E)  None of the above.

Question 2

Assumptions about capital markets include:

Accepted Answer

A)  Perfectly competitive capital markets. 
B)  The absence of frictions. 
C)  Investors can borrow and lend at some riskfree rate. 
D)  All of the above. 
E)  a and b only. 
A)  Perfectly competitive capital markets. 
B)  The absence of frictions. 
C)  Investors can borrow and lend at some riskfree rate. 
D)  All of the above. 
E)  a and b only.

Question 3

Since diversification reduces unsystematic risk, the relevant measure of risk for an investor who holds a well-diversified portfolio is:

Accepted Answer

A)  Market risk. 
B)  Company-specific risk. 
C)  Total risk. 
D)  Residual risk. 
E)  None of the above. 
A)  Market risk. 
B)  Company-specific risk. 
C)  Total risk. 
D)  Residual risk. 
E)  None of the above.

Question 4

In estimating beta, practical problems arise, which are a function of:

Accepted Answer

A)  The length of time over which the return is calculated. 
B)  The market index selected. 
C)  The specific time period used. 
D)  The number of observations. 
E)  All of the above. 
A)  The length of time over which the return is calculated. 
B)  The market index selected. 
C)  The specific time period used. 
D)  The number of observations. 
E)  All of the above.

Question 5

Capital market theory assumes that:

Accepted Answer

A)  Investors have homogeneous expectations. 
B)  Investors make decisions over a multiple-period investment horizon. 
C)  Investors are risk averse. 
D)  a and c only. 
E)  All of the above. 
A)  Investors have homogeneous expectations. 
B)  Investors make decisions over a multiple-period investment horizon. 
C)  Investors are risk averse. 
D)  a and c only. 
E)  All of the above.

Question 6

Asset pricing models are equilibrium models.

Accepted Answer

A) True 
 B)False

An appealing feature of the APT model is that:

Assumptions about capital markets include:

Since diversification reduces unsystematic risk, the relevant measure of risk for an investor who holds a well-diversified portfolio is:

In estimating beta, practical problems arise, which are a function of:

Capital market theory assumes that:

Asset pricing models are equilibrium models.

Introduction

Overview of Market Participants and Financial Innovation

Depository Institutions

Insurance Companies

Asset Management Firms

Investment Banking Firms

Primary and Secondary Markets

Risk and Return Theories: I

Introduction to Financial Futures Markets

Introduction to Options Markets

Introduction to the Swaps, Caps, and Floors Markets

Common Stock Market: I

Common Stock Market: II

Stock Options Market

The Market for Stock Index Products and Other Equity Derivatives

The Theory and Structure of Interest Rates

Valuation of Debt Contracts and Their Price Volatility Characteristics

The Term Structure of Interest Rates

Money Markets

Treasury and Agency Securities Markets

Corporate Senior Instruments Markets: I

Corporate Senior Instruments Markets: II

Municipal Securities Markets

The Residential Mortgage Market

The Market for Residential Mortgage-Backed Securities

Market for Asset-Backed Securities

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

International Bond Markets

International Bond Markets

Market for Interest Rate Risk Transfer Vehicles: OTC Instruments

The Market for Foreign Exchange and Risk Control Instruments

Filters

Exam 9: Risk and Return Theories: II

An appealing feature of the APT model is that:

Assumptions about capital markets include:

Since diversification reduces unsystematic risk, the relevant measure of risk for an investor who holds a well-diversified portfolio is:

In estimating beta, practical problems arise, which are a function of:

Capital market theory assumes that:

Asset pricing models are equilibrium models.

Introduction

Overview of Market Participants and Financial Innovation

Depository Institutions

Insurance Companies

Asset Management Firms

Investment Banking Firms

Primary and Secondary Markets

Risk and Return Theories: I

Introduction to Financial Futures Markets

Introduction to Options Markets

Introduction to the Swaps, Caps, and Floors Markets

Common Stock Market: I

Common Stock Market: II

Stock Options Market

The Market for Stock Index Products and Other Equity Derivatives

The Theory and Structure of Interest Rates

Valuation of Debt Contracts and Their Price Volatility Characteristics

The Term Structure of Interest Rates

Money Markets

Treasury and Agency Securities Markets

Corporate Senior Instruments Markets: I

Corporate Senior Instruments Markets: II

Municipal Securities Markets

The Residential Mortgage Market

The Market for Residential Mortgage-Backed Securities

Market for Asset-Backed Securities

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

International Bond Markets

International Bond Markets

Market for Interest Rate Risk Transfer Vehicles: OTC Instruments

The Market for Foreign Exchange and Risk Control Instruments

Filters